Which One of the Following Statements Concerning a Sole Proprietorship

question 15

Multiple Choice

Which one of the following statements concerning a sole proprietorship is correct?

• A)The life of the firm is limited to the life span of the owner.
• B)The owner can generally raise large sums of capital quite easily.
• C)A formal charter is required to form a new proprietorship.
• D)The company must pay separate taxes from those paid by the owner.
• E)The legal costs to form a sole proprietorship are quite substantial.

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Definitions:

Monopolistic Competitor

A firm operating in a monopolistic competition market, selling a product that is differentiated from those of competitors.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the financial gain that exceeds opportunity costs.

Perfect Competitor

A firm in a perfectly competitive market, having no control over market price and where goods offered are perfect substitutes.

Differentiated Product

A product that has been designed or marketed to stand out from similar products offered by competitors.